Microsoft agreed to pay Norway's Opera Software $12.75 million to head off a threatened lawsuit over code that made some Web pages on MSN look bad in certain versions of Opera's Web browser, CNET News.com has learned.

Opera disclosed the payment last week in a terse press release that omitted other details, including the name of the settling party and the nature of the dispute.

But a source indicated that the payment came from Microsoft in order to close the books on a clash over obscure interoperability problems. On at least three separate occasions, Opera has accused Microsoft of between its MSN Web portal and various versions of the Opera browser—charges that the software giant has repeatedly denied.

A Microsoft representative said the company does not comment on rumors.

Reached by phone, Opera executives refused to name the company involved in the settlement or describe the nature of the legal claims, citing a confidentiality agreement.

"We forwarded a few facts to a big international corporation and settled before we took legal action," Opera Chief Technology Officer said Tuesday. "This resolves an issue very close to my heart."

The deal marks the latest in a string of settlements from Microsoft, which is seeking to simplify its business by clearing up potentially damaging legal claims. In the past year, the company has agreed to pay billions of dollars to wrap up , and , among others.

While the Opera payment is relatively tiny, it underscores ongoing ripple effects in the browser market that stem from the overwhelming dominance of Microsoft's Internet Explorer. Having used its desktop operating system monopoly to help trounce its primary rival Netscape, Microsoft has . That's left companies with negligible market share such as Opera and Netscape's Mozilla open-source project to lead innovation in the field.

For example, IE 6, the latest version of Microsoft's Web browser, released in August 2001, does not yet offer a tool that automatically blocks Web pop-up advertising. Microsoft has

Last year, a member of Microsoft's IE team indicated that the company planned to of the browser altogether, opting instead to fold its functions into the next major overhaul of its Windows operating system, a project code-named Longhorn.

Since then, however, Microsoft has remained largely silent about its long-range browser development plans.

"I'm not sure what their plan is, whether they'll do some upgrades with SP2, wait for Longhorn or break out a separate release," Directions on Microsoft analyst said. "Whatever they do, IE is not a major strategic technology for Microsoft anymore...They don't have a huge team working on IE, and there hasn't been a lot of evolution in IE for a couple years."

Web authors bow to IE IE's dominance has also created fallout for Web standards, because Microsoft delivers the Web to roughly nine out of every 10 people who use it.

Although IE 6 provides , some Web site developers have decided that it's easier to create sites that , rather than use code that works equally well on all standards-compliant browsers. For example, Shutterfly, the online photo store backed by Netscape co-founder Jim Clark, does not support any version of Opera or Mozilla browsers, according to a displayed on the site this week.

The problem has been a top issue for Web standards advocates for some time, shifting the focus of standards compliance away from browser makers and toward , such as Macromedia and Adobe Systems.

Opera's past complaints with Microsoft included charges that the software giant deliberately sought to undermine the experience of Web surfers using its browser by delivering a different set of instructions to Opera than those sent to IE for rendering Web pages on MSN. The results included misaligned margins and indentations that cut off some words, among other things.

Microsoft in 2003 admitted that it had taken steps to detect different types of browsers accessing MSN and sent different Web page layouts to different products. But the company said its efforts were aimed at promoting standards compliance rather than at hurting products that compete with its dominant Internet Explorer browser. Microsoft said it has since stopped the practice.

"MSN is committed to providing the best experience we can to all of its consumers, and there is no intent to degrade the consumer experience for any visitors to MSN," a Microsoft representative wrote in an e-mail. "When this issue hit last year, MSN tested Opera's latest browser, determined and made adjustments to ensure all Opera 7 users had a quality experience while visiting MSN."

Opera, by contrast, has long contended that Microsoft's alleged maneuvers were intentional and hurt its reputation.

MSN's browser lockouts at the time provided incendiary ammunition for Microsoft critics, including anti-Microsoft industry group , which in 2001 accused Microsoft of unfairly exploiting its massive lead in the browser market to muscle out smaller competitors.

"Who else could it be but Microsoft?" ProComp President Mike Pettit said this week, referring to the payment.

Pettit cast a jaundiced eye at the transaction, along with other settlements Microsoft has made with rivals that have alleged wrongdoing.

"If you really analyze the harm that is inflicted and measure the damages paid, it's a very small dollar amount to Microsoft," Pettit said. "It's just the cost of doing business to them, so they're just going to keep doing it over and over. They pay 5 or 10 cents on the dollar in damages way after the fact, and the net effect of it is to further unbalance the playing field. In the final analysis, they got away with it."

These days, Opera is looking to move past the PC to distribute its Web browser on devices such as cell phones and personal digital assistants. As a result, Opera will in the future face less of a threat from Microsoft, Opera director John Patrick said.

"People wonder why anyone would get into the browser business," he said. "But this isn't about Microsoft and the PC. It's about every other kind of device, from set-top boxes to cell phones. IE doesn't dominate that. It's a different market...The opportunities are enormous."